Torrey Pines is studying whether to outsource its Human Resources (H/R) activities. Salaried professionals who earn $400,000 would be terminated; in contrast, administrative assistants who earn $134,000 would be transferred elsewhere in the organization. Miscellaneous departmental overhead (e.g., supplies, copy charges, overnight delivery) is expected to decrease by $32,000, and $25,000 of corporate overhead, previously allocated to Human Resources, would be picked up by other departments. If Torrey Pines can secure needed H/R services locally for $420,000, how much would the company benefit by outsourcing?

$12,000

$39,000

$146,000

$173,000

Nothing, as it would be cheaper to keep the department open.